Tips to Help Startups Hit the Ground Running

Eve came to me and offered her write-up to trufinancial.ca as guest post. I open and welcome any like-minded to do the same, always great to learn from one another :) Enjoy!

Business startups in Canada face a frequently bewildering array of financial challenges. These can however be resolved into the main areas of tight cashflow, under-capitalization and financial restrictions in the shorter term. Despite these hurdles, the good news is that over 80 per cent of start-ups in Canada manage to keep going past the one year mark.

There is a sting in the tail, however. The unbridled enthusiasm and optimism resultant on initial success can come snapping back a few years down the line to bite the hand of the entrepreneurs who created it. According to Quotezone, it’s important to get the best deal on things like public liability insurance and a raft of other financial safeguards to protect a business of any kind from a range of unwanted eventualities. This applies equally to all financial advice, so if startup owners take the trouble to implement a comprehensive, creative financial strategy from the outset such situations are less likely to arise. Here we offer a few tips for getting a small business past that initial period of uncertainty and prepared for the ensuing critical growth period that lies ahead of it. One of the really critical keys to the success of any startup is the development of a robust financial strategy. It is highly unlikely that all of a startup’s initial funding will be sourced from the same place. All of the possible funding options will need to be looked at before a big loan is taken on board or the savings account is committed serious drainage. New business owners will find help on choosing available grants and funds on the Service Canada website.

Funding sources

Commercial lending – This is often not a viable option for start-ups unless they’re prepared to put up collateral such as a family home.

Bootstrapping – Bootstrapping uses personal money to get the business kick-started. The vast majority of start-ups in Canada use the owner’s credit, savings and home equity loans to get moving.

Love money – This is where big personal financial resources are indeed available, either through family wealth or influential connection. Only a relatively small and clearly fortunate number of Canadian startups manage to get their initial funding in this way.

Crowdfunding – Crowdfunding is a recent phenomenon, whereby a collective effort is made to pool financial commitments from individuals over the internet. Sites such as Indiegogo and Kickstarter are useful possibilities if owners feel that their services or products will have massive popular appeal.

Venture capitalists and angels – Less than 5 per cent of financing for Canadian start-ups comes from capital investment and/or angel investors, as they’re typically looking for substantial returns and fast turnaround. Entrepreneurs who feel they could have a chance with this, however, are referred to the Venture Capital & Private Equity Association of Canada and National Angels of Ontario.

Loans and grants for start-ups in Canada – Depending on the amount of funding a company is seeking and on the programs available, there may be a number of government funding options and initiatives available. Government funding is actually often a much-neglected source of revenue for small businesses and start-ups alike and is an obvious first point of call.

Consult the experts

Owners of start-ups who are looking for financial backing should never be averse to seeking guidance from funding experts, who will possess a wealth of knowledge in the field. The cost of advice may well be cheaper than expected and more than pay for itself. The importance of lending organizations such as banks assumes greater importance as a business grows, and becoming acquainted with these earlier on will be better than leaving things until the last minute when the time factor and other constraints may be more critical. Tax accountants, financial planners and funding experts from the Canadian government can be an invaluable source of help and advice in helping to develop a sound funding strategy for the achievement of financial stability.

Learn how government loans and grants work

Obtaining a small Government grant for hiring in the startup phase may seem small fare, but every little helps and also t is useful for future reference to become familiar with how such things work in practice and what the procedure is. Opportunities for Canadian Government funding may well become replete with opportunities once the business has evolved beyond a handful of employees. When dealing with Government funding, projects have to be planned up to a year in advance and this too is invaluable for acquiring expertise in the planning of longer term disciplined growth.

About the author: Eve Pearce took up freelance writing when she fell pregnant with her first child. It was a wrench to leave her job and colleagues, but now she can combine her love of finance with her love of writing.